- McMillan Shakespeare (MMS) is expecting some lowered profits for the 2020 financial year
- The asset management and salary packaging company says “challenging market conditions” are to blame
- The company expected to post between $83 million and $87 million in profits for 2020
- In the 2019 financial year, profits were $88.7 million — five per cent down on the year before
- McMillan shares closed 7.46 per cent down at $13.28 each
McMillan Shakespeare (MMS) is blaming “challenging market conditions” for an impending 2020 profit drop.
The company’s shares took a nasty hit from a trading update today and closed worth over a dollar less than they were on Friday afternoon.
McMillan, which operates in asset management, novated car leasing, and salary packaging, said net profit after tax for the 2020 financial year is expected to fall between $83 million and $87 million.
In 2019, profits came in at $88.7 million, which was already 5.1 per cent down on the year before.
McMillan said while its customer base is still growing, novated car sales are below company expectations.
“Regulatory changes affecting credit and insurance products have resulted in a reduction in margins,” the company explained in its announcement to the ASX today.
A flat Australian asset management market is also impacting profits, according to McMillan.
Over in the U.K., the company said general market conditions are causing a decline in car registrations, a reduction in new assets financed, and lower interest rates and margins — all key areas McMillan needs to post positive numbers.
On top of this, a softer car market and company changes to McMillan’s funding panel has had an impact on the retail section of its business.
In a small silver lining, however, McMillan’s disability insurance business Plan Partners is meeting expectations in both customer growth and profitability.
Still, this is not enough to soften the blow to McMillan’s share today.
The company was down more than 13 per cent around midday but managed to recoup some of the heavy loss. Shares closed 7.46 per cent down at $13.28 each.